After $43 million loan, it's go time for River West apartment project

A rendering of the project for 500 N. Milwaukee. Pappageorge Haymes is the architect.

A Chicago developer is set to begin work on a two-building, 227-unit apartment project in River West after landing a nearly $43 million construction loan.

The venture of Akara Partners took out the loan Dec. 22 from Chicago-based BMO Harris Bank, according to Cook County records. The firm also has added a Goldman Sachs affiliate as an equity partner and Chicago-based CA Residential as a development partner, Akara founder and CEO Rajen Shastri said.

That clears the way for demolition to begin next week on a building on the site at 500 N. Milwaukee Ave., which Akara bought for $8 million. Construction of the $72 million project is scheduled to begin in February, Shastri said.

“Banks are fairly cautious about lending to large projects of this size and scale,” Shastri said. “They're very focused on the sponsorship and the equity partners.”

SLATED TO OPEN IN 2016

It is the first time Shastri has teamed with his former employer or New York-based Goldman Sachs. Shastri previously was chief investment officer of Campus Acquisitions—now known as CA Ventures, the parent company of CA Residential.

Designed by Pappageorge Haymes, the development will include 14- and four-story apartment towers, 14,000 square feet of retail and 102 parking spaces. There will be 76 studio apartments, 123 one-bedrooms, 20 two-bedrooms and eight three-bedrooms. It will open in spring 2016, Shastri said.

The development is getting off the ground with more than 9,500 new units expected to flood the downtown apartment market in 2015 and 2016, according to Chicago-based Appraisal Research Counselors.

CATERING TO MILLENNIALS

But Shastri said the project at the busy intersection of Milwaukee and Grand avenues and Halsted Street can stand out because of its location and smaller units, which are attractive to young professionals. The development along the Grand Avenue Blue Line station also is close to Google's future offices in the Fulton Market district and Randolph Street's restaurant row, as well as River North technology companies.

“You really have to look at this submarket by submarket,” Shastri said. “There probably will be pockets of oversupply. That being said, I'm cautiously optimistic about the apartment market overall, especially for the demographic we're focused on for 500 N. Milwaukee. Our project caters to a younger, millennial renter. Differentiation is important. I think we have that in terms of the design and the location.”